Nike, Yum! Brands, Intel, IBM and Cisco highlighted as Zacks Bull and Bear of the Day
CHICAGO, Oct. 15, 2014 /PRNewswire/ -- Zacks Equity Research highlights Nike (NYSE:NKE-Free Report) as the Bull of the Day and Yum! Brands (NYSE:YUM-Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis onIntel Corp. (Nasdaq:INTC-Free Report), IBM (NYSE:IBM-Free Report) and Cisco (Nasdaq:CSCO-Free Report).
Here is a synopsis of all four stocks:
Nike (NYSE:NKE-Free Report) is easily one of the most recognizable brands in the world and the company clearly dominates a variety of areas in the broader apparel market. However, a number of upstarts have begun to slowly eat into Nike's market share, or are threatening to take bigger leaps into long-dominated areas of Nike's empire.
While this has been a bit of a concern as of late, Nike has defended its key markets pretty well and could see continued strength as we head into the holiday season with oil prices slowly trickling lower (and thus putting more money in consumers' pockets). This is especially true if investors consider the company's most recent earnings report, and their own near term outlook.
In the firm's most recent report, EPS came in at $1.09 share which was a 27% year-over-year increase, and a mark that easily crushed the consensus estimate of 88 cents a share. Strong sales (15% growth) largely were the reason for this beat, though improving margins and a stock buyback also helped.
Nike management also boosted their outlook in the most recent report, projecting strong EPS growth in the high teens for the quarter, while nearly 20% growth in fiscal 2015. The company also expects higher gross margins with an improvement of between 125-150 bps, suggesting that increased growth levels will definitely be helped by higher levels of profitability.
Thanks to this bullish outlook and the relatively favorable situation for many consumer discretionary firms heading into the final part of the year, it shouldn't be too surprising to note that NKE analysts have been raising their estimates following this report.
Despite lower gas prices and a relatively strong U.S. economy, it has been a tough time for many restaurateurs. And for those with a global focus, the pain has been especially severe as a slowdown in many key emerging markets, such as China, appears to be in full swing.
Take for example Yum! Brands (NYSE:YUM-Free Report), the global fast food behemoth. The company owns Pizza Hut, KFC, and Taco Bell, but it has been having a pretty disastrous stretch as of late. In fact, YUM is down close to 18% in the past three months (compared to a market loss of 4% in the period), and if you look at the company's most recent earnings report, there are definitely clues that suggest this trend could continue.
Although YUM beat estimates by a penny and earnings were up year-over-year, revenues came in a bit short. Sales missed estimates by 3%, while they declined by the same amount when compared to the year ago period.
The cause of these sluggish numbers was undoubtedly weakness in the all-important China division. The comps here were down 14%, and this was worse than company expectations of a 13 percent decline. Part of this decline stems from more issues with improper food handling and a lack of hygienic practices, but this just continues a string of bad publicity incidents for YUM in China which have probably scared off many consumers.
Additional content:
Intel Beats Q3 Earnings, Revenue Estimates
Chip giant Intel Corp. (Nasdaq:INTC-Free Report) once again beat earnings expectations for its fiscal Q3 of 2014. The company posted earnings per share of 66 cents on revenues of $14.6 billion, topping Zacks consensus expectations of 65 cents and $14.44 billion, respectively.
It's time to conclusively state that Intel's foray into the mobile market over the past several quarters has gone extremely well -- this is the fourth time in the past five quarters the company has exceeded earnings expectations. Earnings were also up 13.7% year over year, indicating that the growth aspect of the mobile market continues on a robust trajectory. Intel has made this tricky transition better than most big chipmakers, such as IBM (NYSE:IBM-Free Report) and Cisco (Nasdaq:CSCO-Free Report).
Analysts tend to lock in estimates with Intel, although this quarter there was a bit more activity both upwardly and downwardly revising earnings estimates for Q3 and fiscal 2014 and 2015. The somewhat mixed bag -- though it did have an upward bias overall -- is the main reason Intel currently has a Zacks Rank #3 (Hold).
Year to date, Intel shares are up nearly 24%, including a slight push in after-market trading today following the earnings announcement. It's gained 38% in the past year, and although the stock is down 4% over the past five days -- and what isn't, frankly? -- Intel is the best-performing Dow stock of 2014 thus far.
Last year's Q4 was the last time Intel missed estimates. We're expecting $14.7 billion in revenues and 62 cents per share as of now. Check analyst estimate revisions in the coming days, and see how a strengthening or weakening of these numbers will have a direct effect on Intel's Zacks Rank.
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